RETALIATION. February 2015 INDEX LCW NEWS

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1 February 2015 INDEX Retaliation...1 Public Records Act...2 Family and Medical Leave...6 Interactive Process...8 Retirement...10 Wage and Hour...12 Labor Negotiations...13 ACA Corner...14 LCW NEWS LCW Conference...15 Firm Publications...15 New Associates...16 LCW Webinar...16 Super Lawyers...17 Train the Trainer...18 Firm Activities...19 Client Update is published monthly for the benefit of the clients of Liebert Cassidy Whitmore. The information in Client Update should not be acted on without professional advice. Los Angeles Tel: San Francisco Tel: Fresno Tel: San Diego Tel: Liebert Cassidy Whitmore lcwlegal.com/client-update RETALIATION Plaintiff Was Not Required to File Complaint with Labor Commissioner Before Filing Suit for Whistleblower Retaliation Under Labor Code Section In 2010, the Doctor s Medical Center (DMC), which is owned by the West Contra Costa Healthcare District (District), hired Carolyn Satyadi into the position of Clinical Laboratory Director. Satyadi alleges that over the course of approximately a year and a half, she informed the DMC and its executive staff about several practices relating to the laboratory s operations, such as the disposing of dangerous chemicals, that she believed violated state and federal law. Satyadi also claims she refused to participate in the practices she believed were illegal. Satyadi asserts that in 2012, an executive at the DMC made derogatory comments about Satyadi in front of her subordinates. Satyadi complained but was never contacted about her complaint. Two months later, Satyadi was placed on administrative leave pending an investigation into allegations other employees made against Satyadi. Satyadi claims that the DMC and a DMC executive intentionally withheld information from the investigator in order to create a pretext for the District s retaliatory termination of Satyadi. Satyadi was terminated in June 2012 after a DMC hearing that, according to Satyadi, was intended to provide the minimum level of due process required by law. She was informed that no further administrative appeals process existed by which she could challenge her termination. Satyadi filed suit against the District, the DMC, and two DMC officials (District) alleging retaliation in violation of Labor Code section The District filed a demurrer, arguing that Satyadi failed to exhaust her administrative remedies by filing a complaint with the Labor Commissioner as required by Labor Code section Labor Code section 98.7 states that any person who believes she has been discharged or discriminated against in violation of any law under the Labor Commissioner s jurisdiction may file a complaint with the division within six months after the violation. The trial court agreed with the District, and dismissed Satyadi s lawsuit. Satyadi appealed. After Satyadi filed her appeal, the Legislature amended the Labor Code. It added section 244, which states that an individual is not required to exhaust administrative remedies or procedures in order to sue under the provisions of the Labor Code unless the specific provision under which the individual is suing expressly requires exhaustion of an administrative remedy. In addition, Section 98.7 was amended to state that [i]n the enforcement of this section, there is no requirement that an individual exhaust administrative remedies or procedures. lcwlegal.com flsaaudit.com

2 2 Client Update The Court of Appeal asked Satyadi and the District to brief the issue of whether these amendments should be applied retroactively to their case. The parties agreed that if the amendments applied to their case, the trial court s judgment would have to be reversed. It is well established that statutes only apply prospectively unless they clearly express an intent to do otherwise. However, if an amendment does not change existing law, but merely clarifies it, a court does not have to decide whether the law should apply retroactively as opposed to just prospectively. Because the meaning of the statute stays the same, a court does not have to address whether the amendment should affect prior cases. The Court of Appeal then analyzed two prior decisions regarding Labor Code section and administrative remedies to determine the state of existing law. In Campbell v. Regents of University of California (2005) 35 Cal.4th 311, the California Supreme Court held that a University of California employee s lawsuit brought under section had to be dismissed because the employee failed to exhaust the University s administrative grievance process before filing suit. In Lloyd v. County of Los Angeles (2009) 172 Cal. App.4th 320, the Court of Appeal held that an employee was not required to exhaust the section 98.7 remedy before filing suit under section because section 98.7 provides an additional remedy that an employee may choose to pursue, not a requirement that an employee must exhaust. Because Campbell did not address, or even mention, Labor Code section 98.7, the Court of Appeal held that Lloyd, not Campbell, represents the state of existing law. Because California case law did not require exhaustion of the section 98.7 remedy before filing suit under section , the Court held that the Legislature s amendments to the Labor Code did not change existing law, but merely clarified it. Therefore, the Court of Appeal did not have to address the question of retroactivity, and held that Satyadi was not required to exhaust section 98.7 before filing her lawsuit. The Court of Appeal reversed the trial court s judgment, and remanded for further proceedings. Satyadi v. West Contra Costa Healthcare District (2014) 232 Cal.App.4th Note: This case establishes that an employee is not required to file a complaint with the Labor Commissioner before filing suit alleging retaliation in violation of Labor Code section That does not mean, however, that an employee is not required to follow an agency s internal administrative grievance procedure before filing a section retaliation suit. On that issue, Campbell v. Regents of University of California (2005) 35 Cal.4th 311, in which the California Supreme Court held that an employee s lawsuit brought under section had to be dismissed because she failed to exhaust her employer s internal grievance process before filing suit, is still good law. Accordingly, an employee who claims retaliation may be required to exhaust an agency s internal grievance procedure if the procedure covers retaliation-type claims. PUBLIC RECORDS ACT City Was Not Entitled to Attorney s Fees Because Litigation for Records Under Public Records Act Was Burdensome But Not Clearly Frivolous. A car struck Julie Anna Bertoli, age 15, while she was walking on a crosswalk located on Highway 116, which runs through the City of Sebastopol. Bertoli was rendered permanently physically and mentally disabled. Bertoli s family retained attorney David Rouda to represent her interests with respect to the accident. In August 2009, Rouda served the Sebastopol Police Department with a Public Records Act (PRA) request seeking all evidence with respect to Bertoli s accident and any surveys, pedestrian or traffic counts, and letters or complaints received in the prior ten years with respect to the intersection at issue. Rouda claims the Police Department did not provide any records. The Department maintains it produced a complete copy of the traffic collision report related to Bertoli s accident, the handwritten notes of the officer, and a report listing all accidents on Healdsburg Avenue for the past ten years.

3 February In March 2010, Rouda submitted a PRA request to the City s Planning Department requesting 62 different categories of public records in electronic format, when possible. Some of the requests were open-ended and nonspecific. For instance, Rouda requested [a]ny and all documents, including but not limited to traffic impact studies, reports, evaluations, and/or consultations, and correspondence (including but not limited to s, letters, notes, records of phone calls), relating to Highway 116 through the entire city limits of Sebastopol, CA, 1995 to present. The City responded to each request by: attaching responsive documents, attaching a list of files that may contain responsive documents, designating certain departments and/or files where specific responsive documents could be found, referencing certain responsive documents already provided to Rouda, objecting that a request was too ambiguous or overly broad for a response, and/or indicating other agencies that were likely to possess responsive documents. The City also notified Rouda that it was happy to work with him to narrow any overbroad requests, and made space in a City break room twice a week beginning in June 2010 so that Rouda could review documents and designate what he wanted copied. Rouda ultimately spent 20 days over the course of three months reviewing 65,000 pages of potentially relevant documents and designating 16,000 pages for scanning at his expense. Rouda believed that potentially responsive electronically stored information (ESI) existed outside of the paper files provided by the City, and suggested that the City hire, at Rouda s expense, a neutral third-party collection company specializing in the retrieval of ESI, which could search all municipal computers, servers, and electronic storage devices, and any personal computers used by City employees to perform City work outside of the office. The City declined the suggestion. Rouda filed a personal injury suit on Bertoli s behalf in June 2010, and named the State of California, the City, and 35 other defendants. Over the next few months, the City and Rouda communicated about their disagreements over whether the writings of individual City Council members were disclosable public records and whether the City had to conduct over 700 individual searches. The City refused to undertake the task, but said it was willing to discuss reasonable parameters for an search. Bertoli and Rouda filed a petition for writ of mandate in superior court in February The petition sought an order mandating the City to produce ESI, including s, responsive to Rouda s PRA requests, and allowing a third party collection company to copy electronic storage devices inside and outside the City. The City vigorously opposed the petition, and the superior court ultimately denied it. The court found that the City had shown a remarkable degree of openness and cooperation in its response to Bertoli s PRA requests and had reasonably complied, and it characterized Rouda s petition as an unprecedented fishing expedition. Rouda and Bertoli filed an extraordinary writ challenging the trial court s decision, which the Court of Appeal summarily denied. Meanwhile, the City filed a motion for attorney s fees and costs under Government Code section 6259, which provides that a court may award costs and reasonable attorney s fees to a public agency if it finds that the plaintiff s case under the PRA was clearly frivolous. The court granted the motion, finding that the petition was clearly frivolous, and awarded a total of $44,630 in fees and costs. Rouda and Bertoli appealed. Because the Court of Appeal had already summarily denied Rouda and Bertoli s appeal challenging the trial court s denial of their writ petition, the Court of Appeal only addressed the issue of costs and attorney s fees, and reversed. The PRA, Government Code section 6250 et seq., was intended to provide the public with broad access to government files. As such, the term public records is broadly defined, and disclosable records must be turned over regardless of the manner in which they have been stored. While a plaintiff that prevails in PRA litigation is entitled to costs and attorney s fees, a public agency that prevails is only entitled to costs and fees if the trial court finds that the plaintiff s case was clearly frivolous. However, the PRA does not define the term clearly frivolous. Based on previous case law, the Court of Appeal stated that an action is frivolous if it is entirely lacking in merit; i.e., any

4 4 Client Update reasonable attorney would agree that the case is totally without merit. An award of attorney s fees and costs against a plaintiff in a PRA action should only be used to deter the most egregious conduct. Further, an agency is only required to disclose records that can be located with reasonable effort, and any request that requires an agency to search an enormous volume of data for a needle in a haystack or compels the production of a huge volume of material may be objectionable as unduly burdensome. However, a request that is overly burdensome is not necessarily entirely lacking in merit. Here, Rouda and Bertoli reasonably could have believed that there was responsive ESI that the City had not disclosed. For instance, Rouda received s written to the City s Engineering Director in response to a Caltrans PRA request that the City had not disclosed. Therefore, while the actual requests and the petition were overly broad, the core of Rouda and Bertoli s requests were not completely without merit. Furthermore, when the superior court decided to award fees, it took into account the fact that Rouda and Bertoli sought access to the personal electronic devices of individuals. However, Rouda and Bertoli s position that responsive public records could exist on private electronic devices was not entirely frivolous given the current state of the law. The Court noted that an that relates to the conduct of the public business and is written and stored by an agency employee on his/her personal computer or cell phone is arguably a writing that is prepared, owned, used, or retained by a local agency, and a rule exempting these records from disclosure would allow a public agency to shield its public documents from disclosure simply by instructing its employees to use their private accounts. In addition, this exact issue is currently pending before the California Supreme Court. In June 2014, the Supreme Court granted review to determine whether written communications pertaining to city business that are sent or received by public officials and employees on their private electronic devices using their private accounts and are not stored on city servers or directly accessible by the City are public records. Therefore, this area of the law is in flux, and Rouda and Bertoli s petition was not entirely lacking merit. For the foregoing reasons, the Court of Appeal held that Rouda and Bertoli s PRA requests and writ petition were not clearly frivolous, and reversed the award of attorney s fees and costs. Bertoli v. City of Sebastopol (2015) 182 Cal.Rptr.3d 308. Note: The Court of Appeal suggests in its decision that an sent from a public employee s home computer and private account should be considered disclosable public records under the PRA as long as they relate to the conduct of the public s business. However, as it further noted, this issue is currently in a state of flux, and will be addressed by the California Supreme Court later this year, when it reviews City of San Jose v. Superior Court (2014) 225 Cal. App.4th 75. Suffice it to say that it is extremely difficult for a public entity to recover its costs and fees in defending against a public records act request, although payment of costs and fees to a successful requesting party is automatic. Trial Court Erred By Reading into the Public Records Act a 60-Day Time Limitation on Disclosure of Police Records. On August 20, 2013, Farhad Fredericks mailed a Public Records Act (PRA) request to the San Diego Police Department seeking information about all complaints and/or requests for assistance pertaining to burglary and identity theft in the City of San Diego for the preceding six-month period. Fredericks sought the time, date, and location of all occurrences, the time and date of the reports, the name and age of the victims, and the factual circumstances surrounding the incidents. In a letter dated August 23, 2013, the Department explained to Fredericks its process for compiling crime information. Officers in the field prepare Incident History Reports, which identify the reporting parties and witnesses, before further investigation takes place. The Department then prepares Calls for Service reports, which are digests of the Incident History Reports. The Calls for Service reports, prepared in table form, list the type of reported offense (for instance, burglary), the incident number, the date and time of the report, the location, the police beat number, and the disposition code

5 February (for instance, A for arrest). The Calls for Service reports also list, but redact, the information about the reporting party and his or her telephone number. Because this information is compiled at an early stage of the investigation, it is not clear from the reports whether the reporting party is also the victim of the reported offense. The Department took the position that because the Calls for Service reports are derived from Incident History Reports that are prepared contemporaneously with the service calls, it was only required to provide information for a 60- day period, not older, historical records. The Department also took the position that it could not provide information beyond the time, date, and location of the service request due to privacy concerns and the possibility of endangering the successful completion of an investigation. The Department also told Fredericks that if he wanted additional information, such as the Incident History Reports, he would have to pay $65 per hour for the costs of printing the reports and redacting the victims names and contact information. Fredericks filed a petition for writ of mandate in San Diego Superior Court seeking an order compelling the Department to produce additional information. In response, the Department provided a declaration from Officer Salvador, who located 382 burglary complaints and 712 identity theft complaints and provided Fredericks with 60 days worth of Calls for Service reports for those incidents. Officer Salvador stated in his declaration that if he were to provide the underlying Incident History Reports, he would have to review and redact the witness or reporting party information and then make a copy of the modified report. It would take him over two full work weeks to complete the task for a 60-day request, and over six full work weeks to complete the task for a 180-day request. If any of the burglary or identity theft incidents were eventually determined to constitute an alternative Penal Code offense, such as assault with sexual intent during a burglary, the victims would be entitled to have their names withheld from disclosure under the PRA. Therefore, Officer Salvador would also have to contact the individual officers who prepared each Incident History Report, tell them who was requesting the information, and ask whether the release of such information would endanger the investigation or witnesses. He estimated that this additional level of review and redaction would take six months of work days for a 60-day request or 18 months for a 180-day request. The trial court denied the petition, finding that only current information pertaining to contemporaneous police activity had to be disclosed. While the PRA does not state what time period is appropriate, the trial court suggested that 30-to 60-day-old information was customary and proper. The trial court also noted that the PRA only allows the Department to recover actual duplication costs, and reasoned that it would not be reasonable or appropriate to grant a broader PRA request that required generation and compilation of information from the historical archives if the Department cannot recover such costs. Fredericks appealed, and the Court of Appeal reversed. Under Government Code section 6254(f), a local police agency is not required to disclose records of complaints to, investigations conducted by, records of intelligence information or security procedures of, or investigatory or security files of the agency. However, the agency must still provide some basic information. Where such a request is derived from complaints or requests for assistance, the agency generally must provide the time, substance, and location of all complaints or requests for assistance received by the agency and the agency s response thereto, including the time, date, and location of the occurrence, the time and date of the report, the name and age of the victim, the factual circumstances surrounding the crime or incident, and a general description of any injuries, property, or weapons involved. The Court of Appeal analyzed whether the Department made all appropriate disclosures. It noted that, at first glance, the Calls for Service reports omitted some of the information that section 6254(f) requires, such as the time and nature of the agency s response or the factual circumstances surrounding the crime or incident. However, it also noted that it was unclear from the record whether these details are recorded in written or computerized form and thus subject to disclosure. An agency is only required to comply with a request if responsive records can be located with reasonable effort. An agency may not be required to create a new set of public records. Further, an agency may

6 6 Client Update withhold a record if it can show that on the facts of the particular case the public interest served by not disclosing the record clearly outweighs the public interest served by disclosure of the record. A court performing this balancing test may take into account the expense and inconvenience involved in segregating non-exempt from exempt information, because the public interest includes public concern with the cost and efficiency of government. The Court then analyzed whether Fredericks PRA request legitimately sought all of the information requested above for a period of more than 60 days. The PRA used to require agencies to disclose the current address of an arrested individual. In 1993, a court interpreted that language as only requiring an agency to disclose contemporaneous information. However, the PRA has since been amended, and the Court of Appeal held that there is no basis for reading into the plain language of the statute a 60- day limitation. Instead of deciding whether the Department made all appropriate disclosures and what time period was reasonable in this case, the Court of Appeal remanded the case to the trial court. It noted that in order to fully respond to the PRA request, the Department would have to undertake a complicated, time-consuming review, redaction, and production process... It directed the trial court to make all relevant findings of fact and to analyze the whole picture in order to determine the extent of a reasonable response, both as to content and time frame. The trial court may properly consider the fiscal and workload burden imposed on the Department by Frederick s request. It may also set a time limitation if the public interest balancing factors support one. If, on remand, the trial court determines that more disclosures or disclosures over a greater time period are warranted, but that they would require the generation, compilation, and redaction of information from confidential electronic records, the court may condition disclosure upon an additional imposition of fees and costs over and above the direct costs of duplication. On that basis, the Court of Appeal granted Fredericks petition for writ of mandate. Fredericks v. Superior Court of San Diego County (2015) 233 Cal.App.4th 209. Note: The Fredericks decision comes out of the Fourth Appellate District, which covers San Diego, Inyo, Riverside, San Bernardino and Orange Counties. The holding in Fredericks attempts to distinguish a 1993 decision from the Second Appellate District (which covers Los Angeles, San Luis Obispo, Santa Barbara and Ventura Counties). The Second District case, County of Los Angeles v. Superior Court (Kusar) (1993) 18 Cal.App.4th 588 held that the Public Records Act required disclosure of arrest information that was limited to current information and that pertained to contemporaneous police activity, not historical information. It is possible that the California Supreme Court will resolve this apparent split in authority among California Appellate Districts. However, police departments should be aware of the Fredericks decision and the risk of failing to produce historical arrest information pursuant to a Public Records Act request. FAMILY AND MEDICAL LEAVE Arbitrator Did Not Deprive Employee of Unwaivable Statutory Right When It Found That Car Dealership Terminated Employee for Violating Company Policy. Avery Richey was employed by Power Toyota Cerritos, a dealership associated with AutoNation Inc. There was a general understanding at Power Toyota that outside employment of any kind (including self-employment) while on approved leave was against company policy, and that other employees had been fired for violating this policy. Richey also received a manual noting that outside work while on an approved CFRA leave (leave per the Moore-Brown-Roberti Family Rights Act) was prohibited. In February 2008, while working fulltime for Power Toyota, Richey opened a seafood restaurant. Richey s supervisors met with him shortly thereafter to discuss his work attendance and performance, as Richey was observed to be a bit off his game. In March 2008, Richey injured his back while moving furniture. He requested leave from Power Toyota under the federal Family Medical Leave Act (FMLA)

7 February and its state counterpart, the CFRA. Power Toyota granted Richey s leave request, and extended his leave on multiple occasions. In March 2008, Power Toyota sent Richey a letter warning him that employees are prohibited from pursuing outside employment while on leave, and told him to call if he had questions. Richey ignored the letter. He thought it misstated company policy, and contended the policy did not apply to him because he did not take a job with another employer but was selfemployed. The following week, Power Toyota sent an employee to observe Richey at the restaurant. Richey was observed sweeping, bending over, hanging a sign, and working at the front counter. Power Toyota terminated Richey s employment. Richey sued Power Toyota, its parent companies, and his supervisor alleging violation of his rights under the CFRA. Because Richey had signed an arbitration agreement upon being hired by Power Toyota, the case proceeded to arbitration. The arbitrator found in favor of Power Toyota, concluding that the overwhelming evidence demonstrated that Power Toyota fired Richey for non-discriminatory reasons. The arbitrator found that case law allowed Power Toyota to terminate Richey s employment as long as it had an honest belief that Richey was not being truthful about his outside employment and/or was abusing his medical leave. Richey filed a motion in superior court to vacate the award. The superior court denied the motion, and Richey appealed. The Court of Appeal ruled in Richey s favor, but the California Supreme Court reversed. Arbitration decisions generally are subject to limited judicial review. However, an arbitration award can be vacated if the decision is made in excess of the arbitrator s powers. An arbitrator exceeds his or her powers by issuing an award that violates a party s unwaivable statutory rights. The CFRA provides California employees the right to take up to 12 weeks of leave from work in a 12-month period for the employee s own medical condition or to care for a family member, and the right to be reinstated in the same, or a comparable, position at the conclusion of the leave. However, an employee s right to reinstatement is not unlimited. The regulations interpreting the CFRA state that [a] n employee has no greater right to reinstatement or to other benefits... of employment than if the employee had been continuously employed during the CFRA leave period. An employer may deny reinstatement if it can demonstrate that the employee would not otherwise have been employed at the time reinstatement is requested. The Court of Appeal held that the arbitrator deprived Richey of his unwaivable medical leave rights by allowing the car dealership to fire Richey on the basis of its honest belief that he had abused his leave. It spent nearly six pages of its decision discussing the honest belief defense, concluding that the arbitrator should not have accepted a defense that is unsupported by California law and rejected by most federal courts. The California Supreme Court took an entirely different focus. It reversed the Court of Appeal s decision, but expressly declined to address the question of whether the honest belief defense is a valid defense in California. The Court held that, even if the honest belief defense is not valid, the arbitrator s award should not be vacated because he would have reached the same result and found in favor of Power Toyota in any event. Instead of analyzing the honest belief defense, it analyzed whether Richey violated company policy, and concluded that he did. The arbitrator found that Richey was not terminated because he was on CFRA leave, but because he violated Power Toyota s policy against outside work while on CFRA leave. The Court described the evidence in support of this factual finding as overwhelming. It noted that Power Toyota warned Richey that company policy prohibited outside employment, even self-employment, while on leave, but that Richey knowingly ignored the warnings and blatantly ignored his superiors clear instructions not to work at the restaurant while on CFRA leave. Under the CFRA, Richey had no greater right to reinstatement than if he had been continuously employed during his leave period. The Court reasoned that if Power Toyota could not fire Richey under any circumstances for violating company policy, Richey would be protected from discipline in a way the CFRA does not contemplate. It concluded that the arbitrator did not deprive Richey of an

8 8 Client Update unwaivable statutory right when it relied on substantial evidence to find that Richey violated company policy. Richey v. Autonation, Inc. (2015) Cal.4th [2015 WL ]. Note: In essence, the Supreme Court concluded that the CFRA did not protect Richey from discipline for violating his employer s outside work policies, an issue Power Toyota warned Richey about before he requested or went on leave. However, this decision should not be misinterpreted as a free pass to terminate employees while they are on leave. Employers must act with caution. Regardless of the reasons for the termination, it is likely that a terminated employee will view the decision as retaliation for taking statutorily-protected leave. Further, this decision does not stand for the proposition that an employer should terminate an employee because it suspects he is abusing his protected leave time. Richey was not terminated for abusing his leave time, but for continuing to violate a company policy that he began violating before he went on leave. If an employer suspects that an employee is abusing leave and decides to discipline or terminate the employee on that basis, it should first conduct a thorough investigation. Mere suspicion of misconduct is insufficient. An employee taking CFRA leave must submit certification from a health care provider stating that he has a serious health condition and is unable to perform the functions of his position. The inability to perform the specific functions of one s job is not the same as the inability to perform any work. An employee who has a serious health condition as defined by the CFRA may still be able to, for instance, lift heavy objects at the grocery store or mow his lawn. Acting on a mere suspicion of leave abuse may open an employer up to liability. While the FMLA and CFRA protect employees from retaliation or discrimination on the basis of their leave, they do not protect employees against the consequences of misconduct occurring during the leave. INTERACTIVE PROCESS Right of Representation in Trial Court Act Includes Right for Union to Represent Employee in Interactive Process Meeting. Cyndi Nguyen is an employee of Sonoma County Superior Court and a member of the clerical bargaining unit represented by the Service Employees International Union, Local 1021 (SEIU). She was diagnosed in June 2013 with a physical impairment that substantially impaired her ability to perform a major life activity. Nguyen met with Deputy Court Executive Officer Cindia Martinez as part of the interactive process under the Americans with Disabilities Act (ADA). A few days before the meeting, Nguyen requested that her SEIU representative be permitted to attend because she believed the result of her meeting would affect her wages, hours, and working conditions. Martinez denied the request for representation and explained to Nguyen s representative that he could not attend the meeting because it did not involve discipline. Instead, the meeting would involve a confidential discussion of medical conditions while the parties engaged in the interactive process. At the meeting, Martinez offered to place Nguyen in a legal process clerk Level 1 position, which constituted a demotion. Nguyen asked to start at Level 2, but her request was denied. SEIU filed an unfair practice charge with the Public Employment Relations Board (PERB) alleging that the Sonoma County Superior Court (Court) violated various sections of the Trial Court Employment Protection and Governance Act (Trial Court Act) when it refused to permit Nguyen s SEIU representative to attend the reasonable accommodation meeting. The Office of the General Counsel dismissed the charge. It interpreted PERB s decision in Trustees of the California State University (2006) PERB Decision No H as holding that there is no right to union representation in interactive process meetings. PERB reversed and remanded for the issuance of a complaint. In National Labor Relations Board v. Weingarten (1975) 420 U.S. 251, the United States Supreme Court held that an employee who has a reasonable fear that discipline may result from an investigatory

9 February or disciplinary meeting with the employer has a right to union representation at such a meeting. This right is now commonly referred to as an employee s Weingarten right. However, PERB has long recognized that an employee s right to representation and the exclusive representative s right to represent in meetings with the employer extended beyond investigatory or disciplinary interviews. The Educational Employment Relations Act (EERA) provides employees the right to form, join and participate in the activities of employee organizations.. for the purpose of representation on all matters of employer-employee relations. That provision has been interpreted as including an employee s right to union representation in formal or informal grievance meetings, or matters potentially having an impact on terms and conditions of employment. The EERA also provides that employee organizations shall have the right to represent their members in their employment relations with employers. The Trial Court Act contains provisions that mirror these provisions found in the EERA. PERB agreed with the Court that reasonable accommodation/interactive process meetings pursuant to the ADA or the Fair Employment and Housing Act are not investigatory meetings within the meaning of Weingarten. However, that does not preclude the possibility that the right to representation found in the collective bargaining statutes like the Trial Court Act includes interactive process meetings. The California regulations discussing the interactive process include numerous protections for an employee, and do not preclude the presence of an employee representative during the process. Therefore, the meetings present opportunities for a representative to assist an employee in the process of obtaining a reasonable accommodation. They also present the opportunity for a representative to explain to the employee the employee s rights and the possible consequences of refusing offered accommodations. A representative could also help identify possible conflicts between suggested accommodations and the MOU, as an employer is not required to accommodate an employee by ignoring its bona fide seniority system. Therefore, PERB held that the right of representation guaranteed by Trial Court Act sections 71630, 71631, and includes an employee s right to have a union representative assist him or her in the interactive process by attending meetings with the employer convened to explore possible reasonable accommodations to an employee s disability. While the union has a concurrent right to represent the employee in the interactive process, that right only attaches if the employee requests union representation. PERB reversed and remanded with directions for the Office of General Counsel to issue a complaint. Sonoma County Superior Court (2015) PERB Decision No C, PERC. Note: This is an important case, as PERB overturned prior precedent and held that employees are entitled to union representation at interactive meetings. PERB also implied, but did not explicitly hold, that employees may be entitled to representation at all meetings affecting employer/employee relations (wages, hours and other terms and conditions of employment). While PERB decided the case under the Trial Court Act, we can expect that PERB may interpret all of the other collective bargaining statutes, such as the Meyers-Milias-Brown Act (Government Code section 3500, et seq.), consistently. LCW has been reporting on PERB s recent trend of overturning its prior decisions and gradually expanding the rights of employees and employee organizations. RETIREMENT Supreme Court Unanimously Overrules Presumption That Retiree Medical Benefits in Collective Bargaining Agreement Are Per Se Vested. Hobert Tackett was a long time employee at the Point Pleasant Polyester Plant in West Virginia until he retired in During his employment, Tackett, and other employees, were represented by various labor unions and subject to collective bargaining agreements. In 2000, the plant was purchased by M&G Polymers USA. M&G entered into a master collective

10 10 Client Update bargaining agreement with the labor unions and a Pension, Insurance and Service Award Agreement (P&I Agreement). The 2000 P&I Agreement provided that employees who retired on or after January 1, 1996, who were eligible for and receiving a monthly pension under the company s pension plan, and whose age and years of service equaled 95 or more points would receive a full company contribution towards the cost of the company s health care benefits. The agreement had a term of three years after which it was renegotiated and a similar agreement was adopted in In 2006, M&G announced that it would require retirees to contribute toward the cost of their health insurance. Tackett, with other retirees, sued M&G claiming the language in the 2000 P&I agreement providing that employees with a certain level of seniority will receive a full Company contribution towards the cost of [healthcare] benefits created a vested right to such benefits that continued beyond the expiration of the agreement. Tackett and the other retirees alleged the company had breached the prior collective bargaining, and prior P&I agreements, both in violation of federal labor law and the Employee Retirement Income Security Act (ERISA). The federal district court ruled in favor of M&G, but the Sixth Circuit Court of Appeals reversed. The Court of Appeals relied upon its earlier decision in the case of International Union, United Auto, Aerospace, & Agricultural Implement Workers of Am. v. Yard-Man, Inc., 716 F. 2d 1476, 1479 (1983) (Yard- Man) and its progeny to hold that in the absence of extrinsic evidence to the contrary, the provisions of the contract indicated an intent to vest retirees with lifetime benefits. The United States Supreme Court unanimously reversed the Sixth Circuit Court of Appeals and, in no uncertain terms, disapproved the rationale behind the decision in Yard-Man and its progeny. The Court explained, that [a]s an initial matter, Yard-Man violates ordinary contract principles by placing a thumb on the scale in favor of vested retiree benefits in all collective-bargaining agreements. That rule has no basis in ordinary principles of contract law. The Supreme Court went on to dissect the problems with the Court of Appeals decision, as well as the problems with the Yard-Man decision. For instance, the Supreme Court determined that the Court of Appeal presumed that when parties agree to benefits which accrue upon achievement of retiree status, there is an inference that the parties likely intended those benefits to continue as long as the beneficiary remains a retiree. The Supreme Court rejected reading this presumption into every collective bargaining agreement. Although a court may look to known customs or usages in a particular industry to determine the meaning of a contract, the parties must prove those customs or usages using affirmative evidentiary support in a given case. Further, the Yard-Man decision discounted the presence of durational clauses in collective bargaining agreements providing for the expiration of the agreement at the end of its term. It inferred that parties would not leave retiree benefits to the contingencies of future negotiations and that it is presumed retiree medical benefits continue so long as the beneficiary remains retired. Yard-Man concluded this inference outweigh[ed] any contrary implications derived from a routine duration clause terminating the agreement generally. A subsequent Court of Appeals decision went a step further requiring a contract to include a specific durational clause for retiree health care benefits to prevent vesting. The Supreme Court rejected such reasoning stating these decisions distort[ed] the text of the agreement and conflict with the principle of contract law that the written agreement is presumed to encompass the whole agreement of the parties. The Supreme Court also noted that the Court of Appeal failed to even consider the traditional principle that courts should never construe ambiguous writings to create lifetime promises and failed to consider the traditional principal that contractual obligations will cease, in the ordinary course, upon termination of the bargaining agreement. The Supreme Court reaffirmed that employers can and do create vested rights to retiree medical benefits where the collective bargaining agreement provides in explicit terms that certain benefits continue after the agreement s expiration. However, when a contract is silent as to the duration of retiree benefits, a court may not infer that the parties intended those benefits to vest for life. The Supreme Court

11 February remanded the case back to the Sixth Circuit Court of Appeals to interpret the P&I Agreement according to ordinary contract principles. M&G Polymers USA, LLC v. Tackett (2015) 135 S.Ct Note: While this decision arises out of the private sector, it will likely hold great weight in cases involving public sector contracts that include retiree benefits provisions. The M&G Polymers decision is consistent with the California Supreme Court s holding in Retired Employees Association of Orange County v. County of Orange, which concluded that retiree medical benefits contained in a collective bargaining agreement are to be interpreted according to ordinary contract principles. While public employers are guided by other legal strictures not otherwise found in the private sector (e.g. the Contracts Clause of the United States and California Constitutions), and overriding public policy considerations (e.g. legislation is not presumed to create private contractual rights), at the end of the day, we are guided by ordinary contract principles. Constitution Was Not Violated When MOU Benefit Formula Was Replaced with Pension Reform Act Benefit Formula for New Employees Whose Retirement Benefits Had Not Yet Vested. The County of San Diego (County) and the Deputy Sheriffs Association of San Diego County (Association) were parties to collective bargaining agreements covering the deputy sheriffs unit and the safety management unit through June 26, The agreements required the County to provide covered employees with defined pension benefits based on a 3 percent at age 55 55) formula. On January 1, 2013, the California Public Employees Pension Reform Act of 2013 (Act) (Government Code section 7522 et seq.) became effective. The Act limited the defined benefit formulas available to new members of the County s retirement plan. For new safety members, the County was required to provide a 2.7 percent at age 57 57) formula. The Association filed suit, arguing that application of the 57 formula to new members who were hired and became covered by the agreements on or after January 1, 2013, but before the agreements expired on June 26, 2014, violated the constitution s contract clause. Article 1, section 9 of the California Constitution prohibits the passage of a law that impairs the obligation of contracts. While the terms and conditions of public employment are generally protected by statute, not contract, a public employee s vested pension rights are protected by the contract clause. However, there is no contract clause protection for unvested contractual pension rights. In this case, new safety members became covered by the agreements when they began employment on or after January 1, However, because they did not perform any services for the County before the Act s effective date, they did not have a vested right to the application of the negotiated 55 formula. Therefore, the Association failed to establish that application of the 57 formula to new safety members covered by the agreements violated the contracts clause. The agreements provided that for covered employees hired after January 1 and before July 1, 2013, the County was required to pay 6 percent of the employees required retirement contribution, which averaged percent of pensionable income. For covered employees hired after on or after July 1, 2013, the County was required to pay 3 percent of required retirement contribution during the employees first five years of continuous service and 6 percent thereafter. However, section of the Act provides that new members must pay at least 50 percent of the defined benefit plan s normal cost, which is percent of pensionable income for safety members covered by the 57 formula, and employers are not permitted to pay any of this amount. The Association contended that application of section to new members covered by the agreements constitutionally impaired the County s obligations. The Court of Appeal did not reach the question of constitutional contract impairment, because subdivision (f) of section provides that if the terms of the contract... between a public employer and its public employees, that is

12 12 Client Update in effect on January 1, 2013, would be impaired by any provision of this section, that provision shall not apply to the public employer and public employees subject to that contract until the expiration of the contract. Therefore, under the statute, the conflicting provisions of section did not apply to new members governed by the agreements until the agreements expired on June 26, Deputy Sheriffs Association of San Diego County v. County of San Diego (2015) Cal.App.4th [2015 WL ]. Note: This case reinforces that employers must apply the retirement formulas in the Public Employees Pension Reform Act for new members, even if there was a memorandum of understanding in place as of January 1, 2013 that provided for other formulas. Further, if the employer had a MOU in place on January 1, 2013 that provided for pick-up of member contributions, the employer should continue those pick-ups for new members until that MOU expires, terminates or is amended. WAGE AND HOUR Employees Do Not Have To Be Relieved of All Duty While on Rest Breaks. ABM Security Services, Inc. (ABM) employs thousands of security guards at locations throughout California. Jennifer Augustus and other former AMB security guards filed suit against ABM on behalf of themselves and a class of similarly situated individuals (Plaintiffs) alleging that ABM failed to provide rest periods as required by California law. During discovery, ABM admitted that it requires its security guards to keep their radios and pagers turned on during rest breaks, to remain vigilant, and to respond when need arises, such as when an emergency situation occurs. In 2008, Plaintiffs moved for class certification, contending that ABM had a uniform companywide policy requiring all guards to remain on duty during their rest breaks. In support of the motion, Plaintiffs submitted the deposition testimony of an ABM senior branch manager, who admitted that ABM guards are not relieved of all duties during rest breaks. The court granted the motion. In 2010, Plaintiffs moved for summary judgment, contending that it was undisputed that ABM s employees are required to remain on call during their rest breaks. ABM opposed the motion, submitting evidence that class members regularly took uninterrupted rest breaks, and that any rest period interrupted by a call back to service could be restarted after the situation was resolved. The court granted Plaintiff s motion, and ultimately awarded over $90 million in statutory damages, interest, penalties, and attorney s fees. ABM appealed, and the Court of Appeal reversed. Industrial Welfare Commission (IWC) Wage Order No. 4, subdivision 12, states that every employer must permit employees to take a 10-minute rest period for every four hours worked. The rest period time is counted towards the employee s total hours worked, and the employer cannot deduct the rest period from the employee s wages. Labor Code section further states that an employee shall not require an employee to work during a rest period. ABM security guards must remain on call during their rest breaks, but are permitted to engage in various non-work activities like smoking, reading, making personal telephone calls, and surfing the Internet. Therefore, the Court of Appeal had to determine whether being on-call constitutes performing work, and held that it does not. The Court of Appeal contrasted the language of the rest period wage order with the meal period wage order. Wage Order No. 4, subdivision 11(A), explicitly requires that an employee be relieved of all duty during a meal period, whereas subdivision 12 contains no such requirement. Further, the fact that the wage order requires that an on-duty meal period be paid implies that an on-duty rest period, which is also paid, is permissible. Further, while Labor Code section states that an employee cannot be required to work during a rest period, ABM security guards who are on call have to perform few, if any, of the duties required of guards who are actively on duty. The guards are required to remain available to work, but remaining